Tesmec — Investor Presentation 2018

Aug 3, 2018

• Stringing
• Energy Automation
• Railway
• Trencher

Integrated Solutions Provider

1H 2018 Results Presentation

Corporate Strategy >

• 1H 2018 Results >

• 2018 Outlook >

• Overhead power lines construction & maintenance >

• Reconductoring and line improvement >

• Underground cable laying >

• Railway lines electrification >

• Catenary maintenance and diagnostic >

• Special Applications >

• Telecommunication & Teleprotection >

• Electronic integrated sensors, fault detection and measurement >

• Protections & Electronics for Distribution >

• > Telecom networks, FTTH & long distance, power cable installation

• > Oil & Gas, Water pipelines
• > Bulk excavation of rock and Quarries

TESMEC

" From Steel to sustainable Technology "

OUR MISSION

• Value added integrated solutions provider in the market of infrastructure for the transport of energy, data and material >
• Efficiency, digitalization, safety and sustainability are our drivers for the modernization of the infrastructures projects in the world >
• R&D investments: match the people and high know-how to meet the new demands of the markets >

2017 FUTURE

THE ONLY INTEGRATED SOLUTIONS PROVIDER

IN THE WORLD able to satisfy the infrastructure market's needs through our fully integrated solutions suite

• Corporate Strategy >
• 1H 2018 Results >
• 2018 Outlook >

Main 2018 Business & Projects highlights

• ✓ Launch of the digital machine range: Solutions 4.0
• ✓ Opportunities in Russia
• ✓ Growth of USA & Latam markets

RAILWAY

• ✓ USA: Pipelines
• ✓ Kuwait: multiple projects (housing)
• ✓ Mining
• ✓ Tunneling
• ✓ Safety: driver for technological solutions development
• ✓ France: SNCF RER line C project
• ✓ Diagnostic vehicles prototypes

	1H 2018	AFTER 1H 2018
PUGLIA PROJECT	✓ New railway hub	✓ New plant SOP ✓ R&D projects on going
FINANCE	✓ Buy back from SIMEST for T.USA	✓ Mini Bond ✓ New opportunities Australia – South Africa

Stringing business highlights

SOLUTIONS FOR SMART GRID MAINTENANCE AND MANAGEMENT

• Digital product line:
• ✓ Full interconnected equipment
• ✓ Real time data management
• Innovative methodologies for grid maintenance & disaster recovery:
• ✓ CPS: new refurbishment solution to reduce the power outage
• ✓ Helicopter conductor stringing system
• Enlargement of market segments:
• ✓ Transmission
• ✓ Distribution
• ✓ Underground

From equipment manufacturer to integrated solutions provider for the grids of tomorrow

Recognized innovation player thanks to big investments in R&D

Energy Automation business highlights

SOLUTIONS FOR SMART GRID MAINTENANCE & MANAGEMENT

• Certification of new developments for enabling the start up of sales for local & international markets
• Technological leadership recognized by key market players for sensing, metering, protection, communication and control applications
• Performance improvement through customized solutions both on sensors and protections
• Target markets: Italy, North Africa, CIS Countries, South America

From devices manufacturer to integrated solutions provider for the grids of tomorrow

Become a recognized innovation player through collaborations & participation to technological projects

Trencher business strategy

INTEGRATED SOLUTION PROVIDER IN DIFFERENT INDUSTRIES

▪ Complete offer:

• Innovative equipment
• Advanced services
• Digital know how
• Diversified applications and new activities:
• Mining
• Tunneling
• Civil infrastructures
• Construction
• Pipeline
• FTTH
• Energy cable laying

Wide range of competences and expertise in growing market segments

SOLUTION PROVIDER IN A STRATEGIC COUNTRY: KUWAIT

• The Government of Kuwait is investing large resources, which will amount to over USD 28 billion by 2020, for the development of numerous infrastructure projects (housing, pipeline…)
• Projects portfolio:
• South Al Mutlaa: Phase 1
• South al Mutlaa: Phase 2
• Lowers Fars Heavy Oil Development Project

12 trenchers working in several infrastructure projects

Competitive advantage:

supply of a complete package of solutions to guarantee the high efficiency, not only high-tech products, but also service activities (assistance, maintenance, customer support)

NEW TECHNOLOGICAL DEVELOPMENTS

• Advanced certified vehicles in compliance with the latest EU Standards
• Selected partners: integration with complementary technologies

From construction & maintenance working car to complete railway systems for track and catenary diagnostic

GROUP (€ mln)	1H 2018	1H2017	Delta %
REVENUES	91,1	91,1	0%*
EBITDA	9,3	8,7	7,1%
% on Revenues	10,2%	9,6%
EBIT	2,4	2,0	18,1%
% on Revenues	2,6%	2,2%
Differences in Exchange	0,0	(3,1)	100,0%
% on Revenues	0,0%	3,6%
PROFIT (LOSS) BEFORE TAX	0,8	(2,5)	130,9%
% on Revenues	0,9%	-2,8%
NET INCOME/(LOSS)	0,5	(1,8)	129,8%
% on Revenues	0,6%	-2,0%

ENERGY	1H2018	1H2017	Delta %
Revenues	20,8	32,0	-35,0%
EBITDA	2,6	5,6	-53,9%
% on Revenues	12,3%	17,3%

TRENCHERS	1H2018	1H2017	Delta %
Revenues	60,0	51,3	17,0%
EBITDA	5,2	2,0	156,2%
% on Revenues	8,7%	4,0%

RAILWAY	1H2018	1H2017	Delta %
Revenues	10,3	7,8	31,6%
EBITDA	1,6	1,1	37,5%
% on Revenues	15,1%	14,4%

GROUP (€ mln)	1H 2018	1H 2017	Delta %
NFP	92,1	91,5	-0,7%

*+ 2% at constant currencies

GROUP (Euro mln)	1H 2018	1H 2017	1H 2016
Differences in Exchange	0,0	(3,1)	(0,5)
of which:
Realised	(0,1)	(0,1)	(0,1)
Unrealised	0,1	(3,0)	(0,4)
Differences in Exchange for currency:
USD	0,5	(2,2)	(1,0)
ZAR	(0,4)	(0,2)	0,2
IDR	-	(0,3)	-
OTHER	(0,1)	(0,4)	0,3
Total	0,0	(3,1)	(0,5)

EBITDA 1H 2018

€ mln

3 rd August 2018 17

Financial Information (€ mln)	1H 2018	2017
Net Working Capital	64,9	60,8
Non Current assets	69,7	68,4
Other Long Term assets/liabilities	1,9	0,9
Net Invested Capital	136,5	130,1
Net Financial Indebtness	92,1	85,2
Equity	44,4	44,9

2017 Working capital impacts in Net Investing Capital 1H 2018

Working Capital evolution

2017 € 60,8 mln

Increase of trade receivables following sales closed at the end of the quarter

1H 2018 € 64,9 mln

3 rd August 2018 20

• Corporate Strategy >
• 1H 2018 Results >
• 2018 Outlook >

2018 Trend & Outlook

TREND	DEFLATION  CONTROLLED INFLATION Raw material cost increase and slow deliveries.
	ENERGY	AUTOMATION: ✓ Certified R&D solutions ✓ Development in foreign markets (Russia)	STRINGING: ✓ Recovery for new products ✓ Recovery for expected project in North and South America
BUSINESS	RAILWAY	Integrated solutions: ✓ Catenary: new working methodology	✓ Diagnostics applications
TRENCHERS		✓ Strong increase in mining projects ✓ Good balance in key markets ✓ Italy: RH pilot
OUTLOOK
		Sales: target around 200 M €
	EBITDA % improvement due to better fixed costs absorption & efficiency in the business
ECONOMICS	Positive Net Profit
& xxx FINANCIALS	NFP: improvement is expected thanks to the normalization of working capital & operating profitability
	Expected	BACKLOG better than 2018.1H
		Strong productivity recovery in 2H vs 1H
	Efficiency recovery

BACKLOG

Summary 1H 2018 Profit & Loss statement - Appendix A

Profit & Loss Account (€ mln)	1H 2018	1H 2017	Delta vs 2017	Delta %
Net Revenues	91,1	91,1	-	0,0%
Raw materials costs (-)	(39,3)	(41,5)	2,2	-5,3%
Cost for services (-)	(15,4)	(15,6)	0,2	-0,5%
Personnel Costs (-)	(24,5)	(23,7)	(0,8)	3,0%
Other operating revenues/costs (+/-)	(5,8)	(4,5)	(1,3)	26,0%
Portion of gain/(losses) from equity investments evaluated using the equity method	0,1	0,1	-	-51,1%
Capitalized R&D expenses	3,1	2,8	0,3	9,7%
Total operating costs	(81,8)	(82,4)	0,6	-0,7%
% on Net Revenues	(89,8%)	(90,5%)
EBITDA	9,3	8,7	0,6	7,1%
% on Net Revenues	10,2%	9,5%
Depreciation, amortization (-)	(6,9)	(6,7)	(0,2)	3,8%
EBIT	2,4	2,0	0,4	18,1%
% on Net Revenues	2,6%	2,2%
Net Financial Income/Expenses (+/-)	(1,6)	(4,6)	3,0	65,2%
Taxes (-)	(0,3)	0,8	(1,1)	-133,5%
Minorities	-	-	-	-97,5%
Group Net Income (Loss)	0,5	(1,8)	2,3	129,8%
% on Net Revenues	0,5%	-2,0%

Summary 1H 2018 Balance Sheet - Appendix B

Balance Sheet (€ mln)	1H 2018	2017
Inventory	71,7	69,9
Accounts receivable	54,2	39,9
Accounts payable (-)	(48,7)	(39,5)
Op. working capital	77,2	70,3
Other current assets (liabilities)	(12,3)	(9,5)
Net working capital	64,9	60,8
Tangible assets	48,2	46,1
Intangible assets	17,8	18,3
Financial assets	3,7	4,0
Fixed assets	69,7	68,4
Net long term liabilities	1,9	0,9
Net invested capital	136,5	130,1
Cash & near cash items (-)	(16,7)	(21,5)
Short term financial assets (-)	(7,7)	(12,5)
Short term borrow ing	74,8	79,2
Medium-long term borrow ing	41,7	40,0
Net financial position	92,1	85,2
Equity	44,4	44,9
Funds	136,5	130,1

Disclaimer

The Manager responsible for preparing the company's financial reports, Gianluca Casiraghi, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records.

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

Any estimates or forward-looking statements contained in this document are referred to the current date and, therefore, any of the assumptions underlying this document or any of the circumstances or data mentioned in this document may change.

Tesmec S.p.A. expressly disclaims and does not assume any liability in connection with any inaccuracies in any of these estimates or forward-looking statements or in connection with any use by any third party of such estimates or forward-looking statements.

This document does not represent investment advice or a recommendation for the purchase or sale of financial products and/or of any kind of financial services. Finally, this document does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state.

In addition to the standard financial reporting formats and indicators required under IFRS, this document contains a number of reclassified tables and alternative performance indicators. The purpose is to help users better evaluate the Group's economic and financial performance. However, these tables and indicators should not be treated as a substitute for the standard ones required by IFRS.

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